Evidence Based Benefit Design: A Key Pillar of Value Based Purchasing

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Matilda Roberts
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1 Evidence Based Benefit Design: A Key Pillar of Value Based Purchasing Andrew Webber, President and CEO National Business Coalition on Health Center for Value Based Insurance Design University of Michigan, December 15, 2005

2 National Business Coalition on Health (NBCH) Our identity: National, non profit association of nearly 80 business and health coalitions. Network of 7,000 employers and 30 million covered lives Our vision: Market-based reform through value based purchasing, community by community Our primary mission: Building coalition and employer leadership capacity in value based purchasing Our focus: Local markets and collective employer action Our current strategic goal: To be a catalyst and distribution network for best practices in value based purchasing

3 Key Take Aways The Health Care System can do better! Value Based Purchasing is still the path forward but must be led by employers Evidenced Based Health Benefit Design can help steer consumers to appropriate and clinically effective medical interventions and high performing plans and providers

4 The US Health Care System (or Non-System): Opportunities Abound Safety - Tens of thousands die due to medical errors (IOM, 99) Effectiveness - 50/50 chance of getting appropriate care (McGlynn, 03) Unexplained Medical Practice Variation - Supply Induced Demand (Wennberg, present) Administrative Waste and Absence of HIT Uninsured- over 40 million people (IOM, 03)

5 And We Get What We Pay For: Throughput rather than outcomes Individual units of care rather than episodes of illness Acute care not prevention Medical errors and do overs With no payment by performance And consumers insulated from cost sensitivity because of 3 rd party payment Resulting in No Business Case for Quality!

6 All Leading to Unsustainable Cost Escalation 18% 16% 14% 18.0% 14.0% Health Insurance Premiums Workers Earnings Overall Inflation 12% 10% 12.0% 10.9%* 12.9%* 11.2%* 8% 8.5% 8.2%* 6% 4% 5.3%* 2% 0% 0.8% * Estimate is statistically different from the previous year shown at p<0.05. Estimate is statistically different from the previous year shown at p<0.1. Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: ; KPMG Survey of Employer-Sponsored Health Benefits:1993, 1996; The Health Insurance Association of America (HIAA): 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index (U.S. City Average of Annual Inflation (April to April), ; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April),

7 Whither Employers? A Tale of Two Cities: Stay in the Game/Vanguard Employers: - workforce as primary competitive asset - investment in robust benefits important to recruitment and retention - hope for health care system reform Exit/Battle Fatigue Employers: - workforce not primary competitive asset - little hope for health care reform - shift costs to employees and plan exit strategy

8 Imagine John Lennon

9 Value Based Purchasing: A Path Forward Four Pillars: 1. Performance Measurement 2. Transparency and Public Reporting 3. Payment Reform 4. Consumerism Accelerating the Pace to the Ultimate Goal: Health and Health Care Improvement

10 Performance Measurement 50th %ile MD Quality Index (outcomes or % adherence to EBM) Lower Higher High Quality High TCO Low Quality High TCO Higher MD Longitudinal Efficiency Index (total cost per case mix-adjusted treatment episode) High Quality Low TCO (Dream Docs) Low Quality Low TCO Lower 50th %ile

11 Transparency and Public Reporting 115 Eligible Hospitals in Wisconsin 24 Alliance Service Area (Hospitals in Public Report) 91 Non-Alliance Hospitals 46 No Report Hospitals 46 No Report Hospitals 45 Private Report Hospitals 45 Private Report Hospitals* * Three hospitals were lost to closure and two hospitals were ineligible due to overlapping administrative structures

12 Percentage of hospitals who had poor scores at baseline and who improved their scores in the post-report period 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 88% 42% 33% Public Report (n=8) Private Report (n=15) No Report (n=12)

13 Payment Reform Bridges to Excellence Structure (PPC): Patient safety e-prescribing Guideline-driven care EHRs Focus on high-cost patients Care coordination Improved compliance Patient education & support Process & Outcomes (DPRP & HSRP): NCQA HbA1Cs tested and controlled LDLs tested and controlled BP tested and controlled Eye, foot and urine exams LDLs tested and controlled BP tested and controlled Use of aspirin Smoking cessation advice

14 Consumerism The Goal - Awaken the Individual Consumer (the Sleeping Giant) to Make Informed Choices Selections of: A Healthy Life Style Evidenced-based Preventive Services, Medical Treatments, and Pharmaceutical Interventions Self-management of illness/disease High Performing Health Plans, Doctors, Hospitals

15 What is the Employer Role? Two Key Strategies: Health and Productivity Programs Evidence-based Health Benefit Design In Combination and Coordinated a Powerful Force!

16 What is Evidence Based Benefit Design? Key Principles: Individuals need financial skin in the game, ideally means tested Benefit design should be used to steer individuals towards evidence based medical and pharmaceutical interventions and high performing plans and providers. Individuals who reduce risk factors and self manage chronic illness should be rewarded through reduction/waiver of insurance copays Basic architecture should rely on broad choice but with differential tiering

17 Do CDHPs Fit the Evidenced Based Benefit Design Criteria? Reduces/delays demand for appropriate services Relies on consumers in a market that lacks information/transparency Would benefit from expanding definition of preventive services in basic insurance package CDHPs have raised profile of the importance of consumer engagement

18 Are There Models of Evidence Based Benefit Design?

19 General Motors HMO A HMO B HMO C HMO D evalue8 RFI Results Raw Score Flex Score (25) HEDIS / CAHPS (CARS evaluation) Raw Score Flex Score (20) NCQA Accreditation Raw Score Flex Score (5) Commendable 2 Excellent 5 Excellent 5 Accredited 1 Total Quality Score (50) National Rate Rankings Relationships of rates to Local Indemnity Total Cost Score (50) Total Quality + Cost (100) Rating Below Avg Benchmark Strong Good Sample Employee Contribution $100 $20 $40 $55

20 The Boeing Company Creating Differential Hospital Insurance for Employees Effective July 1, 2004, union employees and early retirees will obtain 100% coverage after deductible for services provided by a Leapfrog-compliant hospital. Hourly employees hospitalized in facilities that do not meet the Leapfrog safety practices will obtain 95% coverage after deductible. This benefit design will remain in place until July 1, 2006 when a new collective bargaining agreement becomes effective.

21 Pitney Bowes Pharmacy tier co-pay and benefit changes: Tier 1: 10% co-pay includes: Most generics All medications for: Diabetes / Asthma / Hypertension Tier 2: 30% co-pay Most preferred brand name drugs Tier 3: 50% co-pay Non-preferred brand name drugs Other Pharmacy Changes: No mandatory mail order No mandatory generic No step therapy Limited prior authorization requirements

22 Pitney Bowes Diabetes Results Market Share Use of impacted drugs increased from 41% to 71% For Type 2 diabetics, use of impacted drugs increased from 29% to 52% 85% of people on impacted drug remained on treatment Cost & Utilization Median total medical cost of a diabetic decreased 6% Office visits per 1,000 declined 4% ER visits per 1,000 declined 35% Pharmacy Net per member per month pharmacy costs declined 12% Decreased cost of drugs used to treat complications offset increase in cost of diabetic drugs Decreased pharmacy costs of 7% for diabetics Source: Pitney Bowes, 2004

23 How Do We Accelerate Deployment? A Role for VBID? Identify best practices Measure ROI for the employer Create a generic benefit design model based on low hanging fruit Link evidence based benefit design to health and productivity programs Create distribution network of best practices to coalition/employer community an NBCH role

24 Key Take Aways The Health Care System can do better! Value Based Purchasing is still the path forward but must be led by employers Evidenced Based Health Benefit Design can help steer consumers to appropriate and clinically effective medical interventions and high performing plans and providers

Elevate by Denver Health Medical Plan

Elevate by Denver Health Medical Plan Quality Overview by Denver Health Medical Plan Accreditation Exchange Product Accrediting Organization: Accreditation Status: NCQA Health Plan Accreditation (Marketplace HMO) Accredited* Excellent: Organization